8-KOther EventsExhibits & Filings

FIFTH THIRD BANCORP 8-K Report, Corporate Update (Sep 29, 2015)

Filed September 29, 2015For Securities:FITBFITBOFITBPFITB-PIFITB-PMFITB-PAFITBIFITB-PK

Summary

Fifth Third Bancorp (FITB) filed an 8-K on September 29, 2015, to report significant settlements with the Department of Justice (DOJ) and the Consumer Financial Protection Bureau (CFPB). The company reached agreements to resolve investigations into discriminatory practices in its indirect automobile loan portfolio and issues related to its debt protection credit card "add-on" product. These settlements involve financial penalties and commitments to implement new policies and compliance plans. Specifically, the company agreed to pay $18 million to consumers for the indirect auto loan issues, with a portion credited for prior remediation, and will implement a new dealer compensation policy overseen by its Board and a Special Regulatory Oversight Committee. For the credit card add-on product, Fifth Third will pay at least $3 million in redress to consumers and a $500,000 civil money penalty to the CFPB, along with adopting a compliance plan for such products. These settlement amounts were within the company's previously established litigation reserves.

Key Highlights

  • 1Fifth Third Bancorp settled with the DOJ and CFPB on September 28, 2015.
  • 2The settlement addresses allegations of discriminatory practices in the bank's indirect automobile loan portfolio.
  • 3The company will pay $18 million to consumers for indirect auto loan issues, with a potential credit for prior remediation.
  • 4A new dealer compensation policy will be implemented for indirect auto loans.
  • 5Fifth Third also settled with the CFPB regarding its debt protection credit card 'add-on' product.
  • 6This credit card settlement includes at least $3 million in consumer redress and a $500,000 civil money penalty.
  • 7The company agreed to implement a compliance plan for credit card add-on products and not market similar products without CFPB non-objection.

Frequently Asked Questions

This 8-K filing primarily addresses two settlements: one with the Department of Justice (DOJ) and Consumer Financial Protection Bureau (CFPB) concerning discriminatory practices in Fifth Third Bank's indirect automobile loan portfolio, and another with the CFPB regarding the marketing and administration of the bank's debt protection credit card 'add-on' product.

For the indirect auto loan settlement, Fifth Third agreed to pay $18 million to consumers, which is partially offset by remediation already paid ($5 million to $6 million credit). For the credit card add-on product settlement, the bank will pay at least $3 million in consumer redress and a $500,000 civil money penalty. Notably, the company stated these total amounts were within its previously established litigation reserves, suggesting no unexpected financial impact beyond what was anticipated.

As part of the settlements, Fifth Third Bank will implement a new dealer compensation policy for its indirect auto loans, overseen by its Board and a Special Regulatory Oversight Committee. For the credit card add-on product, the bank will adopt a compliance plan related to advertising, marketing, and performance of such products and will not market similar products without CFPB non-objection.

In both settlements, Fifth Third Bank agreed to the consent orders 'without admitting or denying any of the findings of fact or conclusions of law' (except to establish jurisdiction). This is a common practice in regulatory settlements.